Platform Unifies Lending Experience
By Roy Urrico
When it comes to loan origination systems, Inovatec Systems wants to be an outlier, not the elephant in the room. The lending platform helps financial institutions, including credit unions, differentiate from other direct and indirect lenders by providing faster processing, a better user experience, greater ROI and overall consistency.
“We really have been on a mission to help our lenders achieve those goals,” said Vladimir Kovacevic, founder and chief technology officer at Burnaby, British Columbia, Canada-based Inovatec, which provides cloud-based loan origination and loan management solutions.
Kovacevic noted that a big part of positive borrower-lender interactions ultimately rests on what end users and the financial institutions gain from the lending experience. Whether a consumer applies for a loan at a dealership, credit union or website, it should be a consistent rate, process and experience. “As a lending institution, you do not really have a proper connection with a consumer until the loan is actually booked.” He explained, “We allow our customers to blend channels seamlessly as consumers often switch channels throughout the process. You might start on the website by filling out a direct application but then end up at a dealership.”
Inovatec, which focus on everything except mortgage and credit cards, includes a portal, a loan origination system and a loan management system. Kovacevic pointed out that while automotive lending is a major component, the company has many customers who require financing for power sports, recreational vehicles, marine equipment, as well as various types of consumer lending.
Kovacevic noted, “From the moment I started the business (in 2006), the entire auto finance process, at that time and even to some extent today, had a lot of fragmentation of data not being properly stored and managed, not even leveraged to the full extent that it could be.” He added, it is Inovatec’s job to bring its customers, who are lending institutions, all the products available into one environment. “We work with an open API to bring in all that data and structure it properly, and ideally even automate that for you.”
Inovatec set out to create a best-in-class infrastructure, systems and processes designed to facilitate all aspects of online loan origination and loan management workflows quickly and securely and protect against what it says is “book-to-look” erosion. The company’s loan origination system (LOS) and loan management solutions offer a highly customizable list of optional features, such as electronic document management, leasing support, and third-party vendor management. Its “success based” pricing structure, requires lenders only pay for the transactions booked, compared to per-application pricing models favored by other loan originators.
Inovatec Systems lending solutions include:
• Javelin Direct Portal (formerly Compass Direct Portal), allows vendors and lenders to communicate in real-time from the point of an application’s submission, all the way to booking the transaction. The portal can work as a standalone module or as part of a complete lending platform. “We'll obviously connect to major origination portals like Dealertrack and Route One, but it really enables you to take your credit union and connect your website into the same flow,” said Kovacevic.
• Javelin LOS (formerly Compass Asset Financial) offers crediting, auditing and income verification for financing applications, and supports self-configurable credit decisioning, tolerance limits and risk parameters with full auto decisioning and scorecard capabilities. The LOS works as a standalone module or as part of a complete lending platform. Kovacevic noted, “We will do your traditional gathering of all the application data; and manage your documents digitally and electronically so that we have all the paperwork and everything that goes with it for compliance and audit purposes.”
• Javelin LMS (formerly Compass Loan Management), a loan and lease management system with loan servicing and after-care for loans, leasing, consumer/commercial customer service and collections, and third-party vendor management. “(The LMS) takes care of that customer life cycle from the point of onboarding all the way to however the loan or lease may play out,” Kovacevic said.
“When we onboard a new lending institution, we look at their lending policies and procedures. We take those and we configure those within the system,” Kovacevic said. “When a new application comes in the system, we take the data received, pull in additional data points, and run it against those predefined limits.” It typically goes one of three ways: either an automatic approval, an auto decline; or something in between that needs a manual review. “Depending on what we do for the credit analysis, we help guide (the lending institution) to make the decision within policy.”
Flexibility With Lenders and Borrowers
When it comes to credit unions, Inovatec noticed a tendency to put more focus on the member experience and not so much about the profitability necessarily. “It's more about consistency of the experience and making sure members are getting the best possible deal,” Kovacevic said.
In addition, Inovatec wants to offer flexibility. One Canadian credit union Inovatec worked with saw a 100% shift of application volume from indirect to direct lending. Kovacevic held, “We didn't force them to choose one or the other. We have allowed them to find the right balance that works for them between direct and indirect, and manage it all.”
As the pandemic grew and affected financial services overall it highlighted the difference between having the right system and not having the right system, according to Kovacevic. Inovatec’s online portal allowed consumers to make payments, check loan balances and receive payout quotes. “It was also flexible enough that we can do payment deferrals and do it in such a way that there’s no negative impact to the consumer.” Inovatec even added a special program in the pandemic’s first 30 days that allowed financial institutions to mark an account that COVID-19 affected and transmit that update to credit bureaus.
Delivering the Right Loan Solution
“Our forward-looking approach got us to the point where in Canada about 50% of all auto loans go through us,” Kovacevic said. “We know how to work with regional banks, large national banks, credit unions, dealer groups and loan aggregators.”
Inovatec’s credit union clients include the $25.4 billion Surrey, British Columbia-based Coast Capital Savings, which is Canada’s largest credit union by membership with nearly 600,000 members and 51 branches. Besides financial institutions and loan aggregators, original equipment manufacturers, such as Yamaha, use the Inovatec system. An individual can apply and receive credit approval on the Yamaha website (usually within 15 to 20 seconds), then shop at any Yamaha dealership. “It’s all connected and tied in,” Kovacevic stated.
Inovatec, which started its business growth in Canada, recently turned its attention toward the U.S. market. “It was always just a matter of right timing. We are very much aware that the two markets work very similarly. It’s not a 100% the same, but the majority of the processes and procedures are very similar if not identical,” Kovacevic said.
Kovacevic maintained, “Having the right kind of systems in place, allows lenders to offer that level of transparency that’s expected and needed in today's world, no matter how they communicate with you, whether it’s through your website, through a dealership or a broker, or regardless of what product (they pursue).”